All large lenders have raised lending rates since the beginning of 2018 as yields in the money markets hardened in the past few months. Economists and analysts are now betting on two rate hikes by the Reserve Bank of India (RBI) as crude prices hit $80 a barrel, a development that is likely to weigh on inflation.

Pranjul Bhandari, chief economist, HSBC India, on Thursday told a television channel that there may be some pressure on foreign portfolio inflows into India here on. “Our own estimate is that in 2018, the RBI will hike the repo rate by 50 basis points, taking it to 6.5%,” she said.

Consumer price index (CPI)-based inflation rose to 4.58% in April from 4.28% in March, giving rise to expectations that the central bank may be unable to meet its inflation target. In a note dated May 15, Kotak Institutional Equities (KIE) said, “We expect inflation in H1FY19 to marginally overshoot RBI’s CPI inflation range of 4.7-5.1% amid higher food and core inflation before moderating towards 4.5% by end-FY2019.”

Last month, Bank of Baroda (BoB) raised MCLRs by 10 bps across tenures even as the RBI chose to stay put on the repo rate and lowered its inflation forecast for the year ahead.

Banks started raising lending rates in January, with Axis Bank leading the charge that month. In the subsequent months, SBI, HDFC Bank, ICICI Bank and Punjab National Bank hiked rates, in what turned out to be the first series of rate increases since the MCLR framework was put in place.